As you approach your golden years, you have a lot to look forward to. More time with family, less time stuck behind a desk, and a new life filled with adventure, fun and happiness. While retirement is an exciting period in a person’s life, there are also some challenges that await new retirees without proper planning.
Here are ten mistakes you should avoid making pre-retirement.
- Not planning financially – In retirement, income is far scarcer than it once was when you worked full time. Planning ahead can help you save enough for your retirement so that you have enough money to live comfortably.
- 2. Not saving for emergencies – You should not only save enough to live on, but you should also save enough for emergencies. As you age, your health is not what it once used to be and you may face unexpected costs from medical bills.
- 3. Spending money on one big thing – Boats, houses, vacation homes and more! These are all big-ticket items that people love to buy when they first retire. But these are also very costly and can quickly drain any retiree’s budget.
- 4. Relying on interest rates to supplement your income – Interest rates can supplement your income, but if that is the only way you plan to grow your savings during your sunset years, you may be at a loss. Planning multiple ways to grow your money can be very beneficial and ensure you have enough money to live off of.
- 5. Not maximizing your 401k – 401k’s are great for retirement savings but only when they are used correctly. Maximize your 401k and ask a few financial advisors to be sure there isn’t more you can do to grow the funds you save here.
- 6. Not creating a plan – Creating a plan before entering retirement is a smart idea. This will ensure that you are on track with your finances for the years to come and that you have a good handle on where your spending occurs.
- 7. Investing your retirement in your business – Although you may be very loyal toy our company, investing your savings in your company can leave you shortchanged. Instead, work with a financial advisor to come up with a better investment plan that scatters aggressive investments with lower risk investments so that you can be sure you are covered.
- 8. Not scaling back – When you retire, your kids have gone to school and you may not need as much as you once had. Scaling back is a great way to lower your costs and save money throughout your retirement.
- 9. Using your retirement to put your kids through school – College is expensive and many couples believe that they have to dip into their personal retirement savings to put their children through school. While this is admirable, it can also leave you and your kids at a loss if you use too much of your savings to send them to college.
- 10. Not planning for death – As painful as it may be to think about, death is a reality. Plan for your death by buying adequate life insurance so that your family is not left to pay for any debt or be put into debt as their final goodbye to you.
Retirement is exciting, but without proper planning, you could leave you and your family without the cash needed to live out your retirement dreams. Use these tips to properly prepare for your retirement so that you can truly enjoy your golden years.
Krisca Te works with Open Colleges, Australia’s leading provider of TAFE courses equivalent and aged care courses training. When not working, you can find her on Google+ or spends the day with her baby boy.